S Africa – coal sector fears spread of mine strikes

LONDON/JOHANNESBURG (Reuters) – Wildcat strikes by South Africa’s platinum, gold, iron ore and diamond miners could spread to coal, potentially disrupting output from one of the world’s biggest coal suppliers.

As many as 75,000 miners, or 15 percent of the industry’s workforce in South Africa, are on strike, undermining already shaky growth in Africa’s biggest economy and threatening to spread to coal despite big differences between the sectors.

Violent clashes during a six-week stoppage at platinum producer Lonmin resulted in the death of 46 people near the company’s Marikana mine, close to the city of Rustenburg.

Coal majors and smaller firms said they are watching developments closely.

“There is potential for some noise (from the workforce), the situation should be manageable, but sometimes logic goes out of the window,” said one executive at a mining major.

Some smaller miners said they could be more vulnerable.

“People at Rustenburg took matters into their own hands and got a good pay deal. So if others look at that and want the same, it could spread to other provinces or companies,” an official at a small mining firm said, referring to Lonmin’s pay rise.

Miner BHP’s South Africa coal subsidiary BECSA said its operations were continuing normally.

“BECSA believes there is little risk of any strike action occurring,” the company said.

The coal sector was last hit by a strike in July 2011 when workers who negotiate pay through the Chamber of Mines went on a legal strike for a week in pursuit of pay rises.

INDUSTRY ON EDGE

South Africa is one of the world’s top five thermal coal suppliers, shipping more than half of its roughly 70 million tonnes a year of exports to Asia including India.

Fitch ratings said violent protests reflect factors peculiar to the South African platinum sector but also highlight broader problems such as policy uncertainty in the mining sector and a lack of education and labour reforms.

Lonmin’s 22 percent pay rise has made the industry edgy, particularly because the stoppage was not organised by the unions, but by the workers themselves.

“Marikana was a watershed, but the unions are also trying to clamp down on illegal action and the gold companies are making it clear that if you start a wildcat strike you will be fired,” a coal industry source said.

“But I don’t want to say that the coal sector has been saved – anything can happen,” he added. Read more…